Dogecoin Price Drops 14% as 6-Month Highest Profit Taking Hits Doge

Dogecoin has sharply dropped 14% after a significant price increase at the beginning of the month. This price decline is mainly due to profit-taking at a 6-month high, as investors seek to protect their recent gains.

However, there is still hope that Dogecoin's profits could be salvaged, depending on the next moves from key investors.

Dogecoin Investors Are Selling

This week, Dogecoin's actual profit/loss ratio surged after the price increase last week. Profit-taking has reached a 6-month high, indicating that many investors are choosing to withdraw and protect their profits. These profit-takers are likely to have lost confidence in Dogecoin's potential for further price increases, causing them to exit the market.

This behavior from short-term holders has significantly contributed to DOGE's recent price decline. The sudden change in investor sentiment reflects broader market uncertainty, where traders are unwilling to wait for additional profits. As a result, the short-term price prospects for this meme coin are under pressure.

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Despite the profit-taking, Dogecoin's overall macro momentum remains unaffected, as proven by the decrease in Liveliness. This indicator measures the activity of long-term holders (LTHs), who tend to significantly influence a coin's price. Currently, Liveliness continues to decline, indicating that LTHs are not eager to sell their assets.

The stability provided by LTHs has been crucial in supporting Dogecoin's price during previous market fluctuations. Their reluctance to sell, despite recent price volatility, may prevent further significant price drops.

DOGE Price May Continue to Decline

At the time of writing, Dogecoin is trading at $0.233, below the important resistance level of $0.245. Despite strong gains at the beginning of the month, this altcoin has now lost a significant portion of those gains, with a 14% price drop. The current price action suggests a bearish reversal, and the possibility of a quick recovery seems fragile.

With the recent increase in selling activity, Dogecoin is likely to continue facing downward price pressure. If selling continues, the price may drop below the support level of $0.220, potentially testing $0.198 in the coming days. As profit-taking continues, short-term recovery opportunities diminish, indicating a prolonged downward trend.

However, if Dogecoin can reclaim $0.245 as support, the altcoin could recover its recent losses. With the support of resilience from long-term holders, as shown by Liveliness, a successful bounce from this level could push the price to $0.268. This would invalidate the bearish argument and allow DOGE to regain momentum.